OKR adoption is accelerating. At Tasktop, we’ve seen faster take-up in the last year than in the last half a decade. The OKR software market mirrors that growth; it’s projected to grow by 13.73% CAGR by 2027 to reach $1946.88M. And only this month, OKR-tracking platform WorkBoard announced $75 million in funding. Regardless of market or industry, the popular management system for setting organizational goals—harnessed so successfully by the major digital innovators—is helping enterprises adapt to all the disruption that 2020 and 2021 have served up.
At the heart of their business planning, leadership is harnessing OKRs (objectives and key results) to translate urgent corporate objectives into meaningful goals for their business and technology teams. Yet a major challenge facing traditional organizations is aligning the software product delivery with business results. Leadership lacks meaningful outcome-based metrics for their software portfolio, which plays a pivotal role in optimizing the customer experience in the intensified digital-first world.
Speaking with our CEO and founder Dr. Mik Kersten in a recent Project to Product podcast episode, Brian Solis (Global Innovation Evangelist, Salesforce) emphasized that OKRs reflect your organization’s culture and what is deemed valuable. With customer loyalty more fragile than ever, now is the time to reevaluate your financial, business and technology OKRs to ensure they’re hyperfocused on the customer.
That means tracking their continuous improvement journey with a specific set of value stream metrics, known as Flow Metrics, which Mik set out in the Flow Framework® and his book Project to Product. Fortune 500 companies and other large-scale organizations are using these metrics to continuously measure their software portfolio against business results. By setting Flow Metrics as a top-level OKR, they are able to identify leading indicators that guide their trajectory towards their aspirational goals, whatever they may be.
Lessons from the Suez Canal
“Any improvement made anywhere besides the bottleneck is an illusion.” Gene Kim, author of The DevOps Handbook and The Unicorn Project.
The recent incident at the Suez Canal is a perfect illustration of why measuring end-to-end flow to identify bottlenecks is so critical. John Golke, Regional Director at Tasktop, recently wrote about why the macroeconomics of a cargo ship should have you rethinking your software flow. He emphasizes that the cost of production inefficiencies isn’t the isolated cost of the machine or person producing the output but the value delivered. Focusing on the bottleneck that’s impacting your end-to-end flow is an urgent business priority.
To that end, our OKRs must be used to accelerate the flow of value, not slow it down. We must look to avoid OKRs that:
- Are used as a tool to micromanage teams and deliverables
- Use Waterfall planning through multiple-level OKR cascades
- Only use business and financial metrics as key results
- Only use team and proxy metrics as key results
- Conflate OKRs with roadmaps
- Do not account for flow and bottlenecks
- Ignore team capacity and increased WIP
The last one is a major issue slowing down software product delivery. Business demands for digital products and features skyrocketed in response to the remote economy in 2020-2021, with the U.S. Bureau of Labor Statistics estimating that demand for software developers is expected to rise by 22% between 2019 to 2029.
It’s paramount that we do not ignore team capacity and increased WIP, which is one of the major bottlenecks impacting value delivery at organizations. Balancing demand vs. capacity is key to improving flow, as well as managing team health and happiness; we must ensure that ramping up digital initiatives does not manifest into burnout, frustration or apathy (or all three). As Dominica DeGrandis, author of Making Work Visible, explains, focusing on flow is a powerful means to combat cognitive overload.
Learm more about measuring team capacity and neglected WIP with Planview Viz™’s VSM Portfolio Insights.
Building Transformative OKRs
When it comes to setting effective OKRs, we must have:
- Clear business goals and clarity around prioritization
- The ability to measure the flow of value and surface system bottlenecks
- A focus on supporting continual learning and improving
And as we look to plan our continuous improvement journey around these flow-driven OKRs, there are some significant planning dynamics that come into play.
- Roadmaps and plans
- Define what gets delivered and in which order (e.g., the order of the container ships to minimize delays)
- Value Stream OKRs
- Accelerate the flow of work that creates and protect business value
- Surface system bottlenecks (e.g., widening the canal to get more ships through)
- Organizational OKRs
- Create conditions and organizational structures to enable flow (e.g., build a new canal)
Executive leadership plays an incredibly influential role in setting clear goals and removing the system bottlenecks impacting their hard-working and talented teams. The latter are adept at managing their own bottlenecks through their own team metrics (such as DORA). However, more often than the main bottleneck to delivery is outside of their control. Leadership can help if they have the right end-to-end visibility into system flow from a customer perspective.
Harnessing Rapid Feedback Loops
With a clear view across the organization of what we need to do, we then must ensure we have the right metrics in place across multiple levels to track our progress from top to bottom. There are three types of metrics to support us and provide us with significant indicators that we’re on track (as OKRs have a slow cadence compared to product value streams OKRs). We need this continuous feedback to ensure the needle is moving in the right direction:
- Business metrics: tracking value stream outcomes (lagging indicator)
- Flow Metrics: tracking value stream improvement (leading indicator)
- Team metrics: telemetry for fast problem solving (avoid for top KRs)
As we will see with the following example, customer-centric Flow Metrics can inform meaningful decision-making to unlock team capacity to meet customer needs at a faster clip. With these end-to-end feedback loops between team throughput and value stream outcomes, and business OKRs with value stream OKRs, they were able to align to drive a culture of continuous improvement.
The company’s high-level OKR was to become “the most innovative insurer”. Their financial, business and technology OKRs were:
- Financial: Increase market growth by 30%
- Business: Reduce provision policy by 50%
- Technology: Improve Flow Efficiency by 10% (this metric is the percentage of time that your Flow Items (features, defects, debt, risk) are actively being worked on compared to the total time spent in the value stream)
Starting with its most pressing problems first, the company was able to:
- Address the high costs of their cloud storage
With market growth limited by cloud hosting cost, their platform team was able to use Flow Metrics to make their tech debt visible to make a business case to leadership to allow time to reduce it. The result was reducing storage costs by 75%.
- Improve the mobile experience of one of their policy products
Instead of more features, the company sought to remove a bottleneck that would improve their daily work. Running a Flow Efficiency experiment, the team identified verification as a bottleneck. The team targeted a “0 days wait state on business input”. Through this experiment, the team saw a 20% improvement in customer NPS and reduced Flow Time for features by 70%. This accomplishment helped deliver against a company OKR to reduce policy provision time by 50%.
Realizing Your Aspirations
By incorporating OKRs in tandem with Flow Metrics, your entire organization has the clear vision and the necessary visibility and feedback loops to reach your aspirational goals sooner. With crystal clear alignment between business outcomes and product delivery, leadership can ensure their teams have the support, trust and direction they need, helping cultivate a customer-obsessed culture that steers your organization, incrementally, towards ongoing success.
Effective OKRs: Focusing on Outcomes and Finding Flow
When it comes to business planning, it might seem like setting key goals and using the right metrics to measure them would be simple enough for companies to implement, yet many struggle to find meaningful outcome-based metrics. What is the best way to set and measure key results for your software portfolio? How do you make sure that these are both meaningful to the business and actionable for your teams?
Enter OKRs, which exist to translate corporate strategy into meaningful goals company wide. Today, as more and more companies try to adopt an OKR-based management model, many are finding that it’s much more complicated than it seems. It can also be difficult to define key results that provide fast feedback connecting the work of the teams to the business and customer.
- Challenges enterprises are facing with dated methods of measuring delivery and misalignment with business results
- Do’s and don’ts for building effective OKRs, including lessons learned from common pitfalls
- Tracking the continuous improvement journey with Flow Metrics and using these to measure your software portfolio against business objectives
- Creating the conditions for accelerating transformation while empowering teams
Take a Course in Flow Metrics
In this on-demand course by Dominica DeGrandis introduces Flow Metrics, providing a deeper dive into what they are and why you need them. The course explains the theory behind Flow Time, Flow Velocity, Flow Efficiency, Flow Load and Flow Distribution.
This course is provided on-demand and includes video lessons by Flow Experts and in-course quizzes. Login details will be provided within 24 hours of registration.